Cirrus Logic Reports Q2 FY21 Revenue of $347.3 Million

Announces CEO and Board Leadership Transition Plans

AUSTIN, Texas–(BUSINESS WIRE)–Cirrus Logic, Inc. (Nasdaq: CRUS) today posted on its website at http://investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the second quarter fiscal year 2021, which ended Sept. 26, 2020, as well as the company’s current business outlook.

“Cirrus Logic delivered revenue above the high end of guidance in the September quarter. We experienced solid sales across the breadth of our product portfolio, with particularly strong demand for components shipping in smartphones,” said Jason Rhode, chief executive officer. “During the quarter, we were pleased to have expanded the number of smartphones, tablets and wearables that are utilizing our technology. The company also reached several meaningful development milestones that we believe will fuel product diversification and growth opportunities in the coming years.”

The company also announced today that the Board of Directors has appointed current President John Forsyth, 47, as president and chief executive officer effective Jan. 1, 2021, at which time Jason Rhode will transition into his new role as executive fellow. “John’s strong leadership and strategic vision make him the right choice to lead Cirrus Logic into what we believe is a very bright future,” said Jason Rhode, chief executive officer. In addition, the company announced that David Tupman will become chair of the Board of Directors, effective the same date, succeeding Al Schuele ahead of his retirement prior to the next annual meeting of stockholders.

For more information on the CEO and Board leadership transition plans, please visit http://investor.cirrus.com/.

Reported Financial Results – Second Quarter FY21

Revenue of $347.3 million;
GAAP and non-GAAP gross margin of 51.9 percent;
GAAP operating expenses of $116.1 million and non-GAAP operating expenses of $97.8 million;
GAAP earnings per share of $0.99 and non-GAAP earnings per share of $1.26.

A reconciliation of GAAP to non-GAAP financial information is included in the tables accompanying this press release.

Business Outlook – Third Quarter FY21

Revenue is expected to range between $440 million and $480 million;
GAAP gross margin to be between 50 percent and 52 percent; and
Combined GAAP R&D and SG&A expenses to range between $121 million and $127 million, including approximately $15 million in stock-based compensation expense and $3 million in amortization of acquired intangibles.

Cirrus Logic will host a live Q&A session at 5 p.m. EST today to answer questions related to its financial results and business outlook. Participants may listen to the conference call on the Cirrus Logic website. Participants who would like to submit a question to be addressed during the call are requested to email investor.relations@cirrus.com. A replay of the webcast can be accessed on the Cirrus Logic website approximately two hours following its completion, or by calling (416) 621-4642, or toll-free at (800) 585-8367 (Access Code: 9088457).

Cirrus Logic, Inc.

Cirrus Logic is a leader in low-power, high-precision mixed-signal processing solutions that create innovative user experiences for the world’s top mobile and consumer applications. With headquarters in Austin, Texas, Cirrus Logic is recognized globally for its award-winning corporate culture. Check us out at www.cirrus.com.

Cirrus Logic, Cirrus and the Cirrus Logic logo are registered trademarks of Cirrus Logic, Inc. All other company or product names noted herein may be trademarks of their respective holders.

Use of non-GAAP Financial Information

To supplement Cirrus Logic’s financial statements presented on a GAAP basis, the company has provided non-GAAP financial information, including non-GAAP net income, diluted earnings per share, operating income and profit, operating expenses, gross margin and profit, tax expense, tax expense impact on earnings per share, and effective tax rate. A reconciliation of the adjustments to GAAP results is included in the tables below. Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. The non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

Safe Harbor Statement

Except for historical information contained herein, the matters set forth in this news release contain forward-looking statements including our statements about the company’s product diversification and growth opportunities in the coming years and our ability to lead the company into what we believe is a very bright future, along with estimates for the third quarter fiscal year 2021 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock compensation expense and amortization of acquired intangibles. In some cases, forward-looking statements are identified by words such as “expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “opportunity,” “estimates,” “intend,” and variations of these types of words and similar expressions. In addition, any statements that refer to our plans, expectations, strategies or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are based on our current expectations, estimates, and assumptions and are subject to certain risks and uncertainties that could cause actual results to differ materially and readers should not place undue reliance on such statements. These risks and uncertainties include, but are not limited to, the following: the effects of the global COVID-19 outbreak and the measures taken to limit the spread of COVID-19, including any disruptions to our business that could result from measures to contain the outbreak that may be taken by governmental authorities in the jurisdictions in which we and our supply chain operate; the susceptibility of the markets we address to economic downturns, including as a result of the COVID-19 outbreak and the actions taken to mitigate the spread of COVID-19; the risks of doing business internationally, including increased import/export restrictions and controls (e.g., the effect of the U.S. Bureau of Industry and Security of the U.S. Department of Commerce placing Huawei Technologies Co., Ltd. and certain of its affiliates on the Bureau’s Entity List), imposition of trade protection measures (e.g., tariffs or taxes), security and health risks, possible disruptions in transportation networks, and other economic, social, military and geo-political conditions in the countries in which we, our customers or our suppliers operate; the level of orders and shipments during the third quarter of fiscal year 2021, customer cancellations of orders, or the failure to place orders consistent with forecasts, along with the risk factors listed in our Form 10-K for the year ended March 28, 2020 and in our other filings with the Securities and Exchange Commission, which are available at www.sec.gov. The foregoing information concerning our business outlook represents our outlook as of the date of this news release, and we expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

Summary financial data follows:


CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)

	Three Months Ended									Six Months Ended

	Sep. 26,			Jun. 27,			Sep. 28,			Sep. 26,			Sep. 28,
	2020			2020			2019			2020			2019
	Q2’21			Q1’21			Q2’20			Q2’21			Q2’20
Portable products	$	312,911		$	210,661		$	349,379		$	523,572		$	552,317
Non-portable and other products		34,414			31,912			39,533			66,326			74,848
Net sales		347,325			242,573			388,912			589,898			627,165
Cost of sales		167,115			115,101			180,979			282,216			296,738
Gross profit		180,210			127,472			207,933			307,682			330,427
Gross margin		51.9	%		52.6	%		53.5	%		52.2	%		52.7	%

Research and development		84,810			78,741			88,239			163,551			177,069
Selling, general and administrative		31,247			29,704			33,018			60,951			62,538
Restructuring costs		–			352			–			352			–
Total operating expenses		116,057			108,797			121,257			224,854			239,607

Income from operations		64,153			18,675			86,676			82,828			90,820

Interest income		1,378			1,576			2,250			2,954			4,535
Other income (expense)		784			111			(568	)		895			(946	)
Income before income taxes		66,315			20,362			88,358			86,677			94,409
Provision for income taxes		6,829			2,153			12,148			8,982			13,581
Net income	$	59,486		$	18,209		$	76,210		$	77,695		$	80,828

Basic earnings per share:	$	1.02		$	0.31		$	1.31		$	1.33		$	1.39
Diluted earnings per share:	$	0.99		$	0.30		$	1.27		$	1.29		$	1.34

Weighted average number of shares:
Basic		58,191			58,313			58,011			58,252			58,276
Diluted		60,127			60,280			60,213			60,203			60,260

Prepared in accordance with Generally Accepted Accounting Principles

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(unaudited, in thousands, except per share data)
(not prepared in accordance with GAAP)

Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. As a note, the non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

	Three Months Ended									Six Months Ended

	Sep. 26,			Jun. 27,			Sep. 28,			Sep. 26,			Sep. 28,
	2020			2020			2019			2020			2019
Net Income Reconciliation	Q2’21			Q1’21			Q2’20			Q2’21			Q2’20
GAAP Net Income	$	59,486		$	18,209		$	76,210		$	77,695		$	80,828
Amortization of acquisition intangibles		2,998			2,998			6,722			5,996			13,950
Stock-based compensation expense		15,476			13,306			13,759			28,782			25,545
Restructuring costs		–			352			–			352			–
Adjustment to income taxes		(2,293	)		(2,982	)		(3,417	)		(5,275	)		(6,220	)
Non-GAAP Net Income	$	75,667		$	31,883		$	93,274		$	107,550		$	114,103

Earnings Per Share Reconciliation
GAAP Diluted earnings per share	$	0.99		$	0.30		$	1.27		$	1.29		$	1.34
Effect of Amortization of acquisition intangibles		0.05			0.05			0.11			0.10			0.23
Effect of Stock-based compensation expense		0.26			0.22			0.23			0.48			0.42
Effect of Restructuring costs		–			0.01			–			0.01			–
Effect of Adjustment to income taxes		(0.04	)		(0.05	)		(0.06	)		(0.09	)		(0.10	)
Non-GAAP Diluted earnings per share	$	1.26		$	0.53		$	1.55		$	1.79		$	1.89

Operating Income Reconciliation
GAAP Operating Income	$	64,153		$	18,675		$	86,676		$	82,828		$	90,820
GAAP Operating Profit		18.5	%		7.7	%		22.3	%		14.0	%		14.5	%
Amortization of acquisition intangibles		2,998			2,998			6,722			5,996			13,950
Stock-based compensation expense – COGS		197			207			254			404			495
Stock-based compensation expense – R&D		9,235			8,653			7,830			17,888			15,070
Stock-based compensation expense – SG&A		6,044			4,446			5,675			10,490			9,980
Restructuring costs		–			352			–			352			–
Non-GAAP Operating Income	$	82,627		$	35,331		$	107,157		$	117,958		$	130,315
Non-GAAP Operating Profit		23.8	%		14.6	%		27.6	%		20.0	%		20.8	%

Operating Expense Reconciliation
GAAP Operating Expenses	$	116,057		$	108,797		$	121,257		$	224,854		$	239,607
Amortization of acquisition intangibles		(2,998	)		(2,998	)		(6,722	)		(5,996	)		(13,950	)
Stock-based compensation expense – R&D		(9,235	)		(8,653	)		(7,830	)		(17,888	)		(15,070	)
Stock-based compensation expense – SG&A		(6,044	)		(4,446	)		(5,675	)		(10,490	)		(9,980	)
Restructuring costs		–			(352	)		–			(352	)		–
Non-GAAP Operating Expenses	$	97,780		$	92,348		$	101,030		$	190,128		$	200,607

Gross Margin/Profit Reconciliation
GAAP Gross Profit	$	180,210		$	127,472		$	207,933		$	307,682		$	330,427
GAAP Gross Margin		51.9	%		52.6	%		53.5	%		52.2	%		52.7	%
Stock-based compensation expense – COGS		197			207			254			404			495
Non-GAAP Gross Profit	$	180,407		$	127,679		$	208,187		$	308,086		$	330,922
Non-GAAP Gross Margin		51.9	%		52.6	%		53.5	%		52.2	%		52.8	%

Effective Tax Rate Reconciliation
GAAP Tax Expense	$	6,829		$	2,153		$	12,148		$	8,982		$	13,581
GAAP Effective Tax Rate		10.3	%		10.6	%		13.7	%		10.4	%		14.4	%
Adjustments to income taxes		2,293			2,982			3,417			5,275			6,220
Non-GAAP Tax Expense	$	9,122		$	5,135		$	15,565		$	14,257		$	19,801
Non-GAAP Effective Tax Rate		10.8	%		13.9	%		14.3	%		11.7	%		14.8	%

Tax Impact to EPS Reconciliation
GAAP Tax Expense	$	0.11		$	0.04		$	0.20		$	0.15		$	0.23
Adjustments to income taxes		0.04			0.05			0.06			0.09			0.10
Non-GAAP Tax Expense	$	0.15		$	0.09		$	0.26		$	0.24		$	0.33

CONSOLIDATED CONDENSED BALANCE SHEET
unaudited; in thousands

			Sep. 26,			Mar. 28,			Sep. 28,
			2020			2020			2019
	ASSETS
	Current assets
		Cash and cash equivalents	$	247,536		$	292,119		$	221,937
		Marketable securities		36,641			22,008			22,563
		Accounts receivable, net		181,496			153,998			217,962
		Inventories		209,050			146,725			144,829
		Other current assets		34,508			35,346			44,729
		Total current Assets		709,231			650,196			652,020

	Long-term marketable securities			328,255			283,573			238,741
	Right-of-use lease assets			137,045			141,274			142,834
	Property and equipment, net			153,640			158,244			178,420
	Intangibles, net			27,898			34,430			54,780
	Goodwill			287,673			287,088			285,321
	Deferred tax asset			7,899			10,052			9,026
	Other assets			48,223			27,820			22,489
		Total assets	$	1,699,864		$	1,592,677		$	1,583,631

	LIABILITIES AND STOCKHOLDERS’ EQUITY
	Current liabilities
		Accounts payable	$	99,105		$	78,412		$	109,374
		Accrued salaries and benefits		41,707			42,439			34,870
		Lease liability		13,994			13,580			13,751
		Other accrued liabilities		23,237			24,206			34,801
		Total current liabilities		178,043			158,637			192,796

	Non-current lease liability			128,570			129,312			133,105
	Non-current income taxes			66,503			71,143			76,847
	Other long-term liabilities			9,917			3,806			2,258

	Stockholders’ equity:
		Capital stock		1,466,978			1,434,929			1,392,650
		Accumulated deficit		(155,260	)		(201,681	)		(213,274	)
		Accumulated other comprehensive income (loss)		5,113			(3,469	)		(751	)
		Total stockholders’ equity		1,316,831			1,229,779			1,178,625
		Total liabilities and stockholders’ equity	$	1,699,864		$	1,592,677		$	1,583,631

Prepared in accordance with Generally Accepted Accounting Principles

Contacts

Investor Contact:
Thurman K. Case

Chief Financial Officer

Cirrus Logic, Inc.

(512) 851-4125

Investor.Relations@cirrus.com